65 65 65 Susan Fuhrman Ken Hydon Josh Lewis Pearson plc 10 5 10 25 – Annual incentive For 2012, annual incentive opportunities were based on the following performance me against these measures (designated as: below threshold, < between threshold and t and maximum and above maximum) was as follows: Use of symbols to indicate extent to which performance targets were met. Provides some insight into performance against measures where targets not disclosed. Performance in 2012 Weighting of performance measures (% of maximum opportunity) See Pearson plc annual report and accounts 2012 page 81 www.pearson.com Name Marjorie Scardino Will Ethridge Pearson plc 90% 30% Pearson plc Operating Underlying Average growth in working Operating adjusted capital to Operating company/ Personal EPS Sales sales ratio cash flow Sales companies objectives – 10% < > 60% 10% < > 10% < > 10% < > 20% 10% < > < > < Operati pro < Pearson North America Rona Fairhead 30% 50% Professional Assessment & Training 10% > FT Publishing John Fallon 30% 60% < < Pearson International Robin Freestone 80% John Makinson 30% – 50% < Penguin Group 10% India O U R S T R ATEGY OUR PERFORMANCE O U R I M PAC T O N SO C I E T Y To ﬁnd out more about our business strategy go to page 06 For an in-depth analysis of how we performed in 2012 go to page 11 For an explanation of our approach to corporate responsibility go to page 34 80 Pearson plc Annual report and accounts 2012 Section 4 Governance 81 Report on directors’ remuneration continued Total remuneration for the directors in 2012 was as follows: 2012 All figures in £000s ANNUAL REPORT AND ACCOUNTS 2012 Salaries/ Annual fees incentive Allowances Benefits Sub-total Longterm Retirement benefits incentives Total (single figure) Sub-total 500 488 Longterm Retirement benefits incentives Total (single figure) Fees paid to non-executive directors in 2012 were comprised as follows: All figures in £000s – 60 – – – – 211 – 500 65 1,550 – 951 25 746 4 213 15 767 16 1,014 – – 712 4,088 6,350 2,455 302 1,532 2,785 1,390 267 1,109 2,122 999 64 317 594 – 151 1,461 2,379 1,094 – 1,081 2,095 1,417 – – 488 706 5,719 8,880 575 3,196 5,161 182 1,574 2,755 – – – 150 2,087 3,331 346 1,571 3,334 David Arculus Patrick Cescau Vivienne Cox Susan Fuhrman Ken Hydon Josh Lewis Basic fee Committee chairmanship Committee membership Senior independent directorship Total 65 65 65 65 65 65 20 – – – 25 – 10 5 15 10 5 10 – 20 – – – – 95 90 80 75 95 75 Annual incentive For 2012, annual incentive opportunities were based on the following performance measures and performance against these measures (designated as: below threshold, < between threshold and target, > between target and maximum and above maximum) was as follows: 95 90 80 – – – 95 90 80 95 100 – – – 75 75 – – 95 95 – – 75 63 1,496 9,588 17,335 8,271 – – – – – – 95 100 – – – 75 – – 95 – – 63 1,959 14,147 24,377 Note 1 For the full year, John Fallon’s remuneration reflected nine months in his role as CEO, Pearson International and three months as Pearson CEO designate and was: salary/fees – £506; annual incentive – £259; benefits – £16; sub-total – £781; retirement benefits – £262; long-term incentives – £1,306; total – £2,349 (all figures in £000s). Note 3 The company provided gifts to Patrick Cescau and Marjorie Scardino after they stepped down from the board. In the case of Patrick Cescau, the value of the gifts was £21,700. Marjorie Scardino received a painting originally purchased by the company for £12,000, which has an estimated value of approximately £50,000 – £100,000. Pearson plc 90% 30% Operating company/ Personal companies objectives Pearson plc Operating company/companies Underlying Average growth in working adjusted capital to Operating EPS Sales sales ratio cash flow Sales – 10% < > 60% 10% < > 10% < > 10% < > 20% 10% < > < > Operating profit Average working capital to sales ratio Operating cash flow Payout in 2012 (% of salary) 43.5% < < 44.5% Pearson North America Rona Fairhead 30% John Fallon 30% 50% 36.4% Professional Assessment & Training 10% FT Publishing 60% > > < < 51.1% Pearson International Robin Freestone 80% John Makinson 30% – 50% < 50.4% 43.4% Penguin Group 10% India Allowances Allowances for Marjorie Scardino include £49,570 in respect of housing costs and a US payroll supplement of £9,985. John Makinson is entitled to a location and market premium in relation to the management of the business of the Penguin Group in the US and received £210,937 for 2012. Benefits Benefits include company car, car allowance and UK healthcare premiums. US health benefits for Marjorie Scardino and Will Ethridge are self-insured and the cost is tax free to employees. For Marjorie Scardino, benefits include £48,600 for pension planning and financial advice. Marjorie Scardino, Rona Fairhead and John Makinson have the use of a chauffeur. F I N A N C I A L S TATE M E N T S Note 2 In anticipation of the proposed reporting regulations, we show a ‘single figure’ of total remuneration, which includes retirement benefits and long-term incentives in addition to the other elements of remuneration that have been shown in previous reports. Consistent with the methodology proposed by the Financial Reporting Council at the time of writing, retirement benefits include the increase in the value of the pension fund during the year, comprising company contributions to the plan during the year for defined contribution plans and the increase in the pension fund offset for inflation and multiplied by 20 for defined benefit plans, as well as other pension-related costs (see the retirement benefits table on page 83 for further detail). Long-term incentives include all awards under the long-term incentive plan, bonus share matching plan or all-employee share plan that vested during the year or that have not yet vested but where performance is known at year-end as well as dividend shares accruing and released on such shares in the year (see the tables on movements in restricted shares and share options on pages 86 to 89 for further detail). Name Marjorie Scardino Will Ethridge G OV E R N A N C E – – 75 – – 95 – – 75 271 125 6,251 316 64 8,271 – – – Benefits Benefits include company car, car allowance and UK healthcare premiums. US health be O U R I M PAC T O N SOC I E T Y – – – Allowances Allowances for Marjorie Scardino include £49,570 in respect of housing costs and a US £9,985. John Makinson is entitled to a location and market premium in relation to the m of the Penguin Group in the US and received £210,937 for 2012. Performance in 2012 Weighting of performance measures (% of maximum opportunity) – – – O U R PER F O R M A N C E Chairman Glen Moreno 500 – Executive directors Marjorie Scardino 993 432 658 293 Will Ethridge Rona Fairhead 529 192 John Fallon 146 63 (appointed 3 October 2012) Robin Freestone 500 252 549 238 John Makinson Non-executive directors David Arculus 95 – Patrick Cescau 90 – 80 – Vivienne Cox (appointed 1 January 2012) Susan Fuhrman 75 – Ken Hydon 95 – 75 – Josh Lewis 4,385 1,470 Total Total 2011 4,139 3,752 2011 Salaries/fees Salaries/fees paid by the company are reported in the table on total remuneration of the directors. Fees paid by other companies to the executive directors for their non-executive directorships elsewhere are reported separately on page 92. OV ERV I E W Total remuneration 41